Prior to 8:30 the 10 yr note traded -10/32 at 3.76%, mortgage prices were down 8/32 frm yesterday's close; the stock indexes were up substantially (DJIA +104). At 8:30 economic data flipped markets around; July retail sales were weaker than expected, -0.1% overall and -0.6% when auto sales are extracted. Weekly jobless claims were expected to be down 5K, but were up 4K to 558K with continuing claims declining to 6.20 mil frm 6.34 mil last week. The initial reaction took the 10 yr note from -10/32 to +6/32 and mortgages from -8/32 to +3/32. We have talked volatility over and over; more of it this morning to start the session. The DJIA index at 8:40 +52 frm +104.
By 9:00 this morning the rate markets were adding to their reversal from earlier; the 10 yr at 9:00 +15/32 at 3.68% -5 BP; mortgage prices +7/32. All about the decline in retail sales and increase in weekly claims. At 10:00 June business inventories, expected -0.9%, won't generate much market interest. The stock market at 9:00 was still pointing to a better open but well off the levels prior to the 8:30 economic data. This afternoon at 1:00 Treasury will conclude its quarterly refunding with $15B of 30 yr bonds to be auctioned.